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प्रश्न
Write answers in ‘one’ or ‘two’ paras each.
What are the primary functions of commercial banks?
उत्तर
The following are some of the functions performed by commercial banks:
i. Acceptance of Deposits- Accepting deposits from the general public is the basic function of a commercial bank. There are various kinds of public deposits such as fixed account deposit, savings account deposit and current account deposits through which the commercial banks deposit the money from the public.
ii. Discounting Bills of Exchange- The commercial banks provide financial assistance to the business community by discounting bills of exchange. A bill of exchange is a document that acknowledges the amount of money that is owed by the debtors as against the goods and services received by him. The banks purchase these bills produced by the customers (after deducting interest on the face-value of the bill). In this sense, by purchasing the bills they provide easy means of finance to the business community as and when required.
iii. Credit Creation- The commercial banks create credit in the economy through demand deposits. Credit creation paves the path for the growth of the economy.
iv. Investment of Funds- Apart from granting loans and advances, the banks also invest their surplus funds in securities. Investment in the securities helps the commercial banks to meet their future requirement of funds. The banks can borrow from the RBI against such securities. Also, if required the banks can sell their securities in the open market to meet their requirement of funds.
APPEARS IN
संबंधित प्रश्न
Explain the primary functions of commercial banks.
The ratio of total deposits that a commercial bank has to keep with Reserve Bank of India is
called:( choose the correct alternative)
(a) Statutory liquidity ratio
(b) Deposit ratio
(c) Cash reserve ratio
(d) Legal reserve ratio
Explain the agency function of commercial banks.
Explain the process of money creation by the commercial banks with the help of a numerical example.
State whether the following statement is true or false :
Credit control is the function of commercial banks.
State whether the following statement is true or false:
Central bank also performs commercial banking business.
Distinguish between the following :
Quantitative and Qualitative measures of credit control.
State with reason. Whether you ‘agree’ or ‘disagree’ with the following statement:
Commercial bank can credit on the basis of primary deposit.
Fill in the blank using proper alternatives given in the bracket:
.................consumption cannot be zero.
Fill in the blank using proper alternatives given in the bracket:
The primary function of commercial banks is to ...................
Write short notes (Any Two)
Types of loans of commercial bank.
State whether the following statement is True or False with reason:
Commercial Banks cannot give interest on deposits.
Fill in the blank with appropriate alternatives given in the bracket :
Commercial banks create __________.
Explain the following concepts or give definitions.
Savings deposits
Distinguish between:
Central Bank and Commercial Bank
Fill in the blank with appropriate alternatives given below
__________ is a primary function of commercial banks.
Fill in the blank with appropriate alternatives given below
Facility of E-banking is provided through __________
Match the following:
| Group A | Group B |
| 1. D-mat account | a. Current account |
| 2. Over draft facility | b. Agency function |
| 3. ATM facility | c. Share brokers |
| 4. Commercial bank | d. General function |
| 5. Credit creation | e. Recurring account |
| f. Profit making | |
| g. Central bank | |
| h. Commercial bank |
State whether the following statement is True or False.
Commercial banks are the backbone of modern economy.
State whether the following statement is True or False.
There is no difference between primary deposit and secondary deposit of a commercial bank.
Define explain the following concept.
Safe deposit vault
Define explain the following concept.
Discounting of bills
Give reason or explain the following statement:
Commercial banks provide agency functions to earn profits.
Give reason or explain the following statement:
Overdraft facility is provided to current account holders.
Give reason or explain the following statement:
Rate of interest on fixed deposit is high.
Distinguish between:
Call loans and long term loans
Distinguish between:
Current account and saving account
Write short note on:
D-mat account
Write short note on:
Long term loans
Answer the following question:
Explain various types of deposits.
State with reason whether you 'agree' or 'disagree' with the following statement.
Credit creation of commercial banks is based on primary deposits.
Define Commercial banks.
Write the mechanism of credit creation by commercial banks.
Explain the role of Commercial Banks in economic development.
Which of the following points states that the open market operation helps in controlling credit creation?
Which of the following are the functions of a commercial bank?
Which of the following are the other functions of a commercial bank?
How Public debt imposes a burden on the economy as a whole?
Demand deposits include ______
Kalpana said that Commercial Bank is the controller of credit. Geeta said that the Central Bank is the controller of credit. Bobby said that both the commercial bank and the Central Bank are the controller of credit. Who among them is not correct?
In the present COVID-19 situation, many economists have raised their concerns that the Indian economy may have to face a deflationary situation due to reduced economic activities in the country. Suppose you are a member of the high-powered committee constituted by the Reserve Bank of India (RBl). You have suggested that as the supervisor of commercial banks, ______ (restriction/release) of the money supply be ensured by the Reserve Bank of India (RBI).
Saving deposit in the Post office is a part of ______
In the case of Gross Domestic Capital Formation, which one will be the part of it?
Read the following hypothetical case study carefully and answer the questions follow on the basis of the same.
Agricultural Developmental Bank of Pakistan uses the production function approach for measuring bank outputs and costs. A translog cost function is estimated to provide an assessment of the bank's scale and scope efficiency, and to quantify the extent to which its production costs are sensitive to the size and output mix. Results show that the bank enjoys both overall and product-specific economies of scale and, therefore, there exists scope for the bank to expand its operations at a declining average cost. Even though bank branches in all size categories enjoy economies of scale, the extent of such economies is larger for branches operating at a smaller scale of production. This implies that as the bank branches grow larger in size in terms of both loan and deposit accounts, they move closer to attaining increasing returns to a factor. It is also shown that the marginal costs of servicing both loan and deposit accounts decline as bank branches grow larger in size in terms of either the number of loans or the number of deposits. This confirms that branches operating at a larger scale of production have attained greater cost-efficiency in terms of servicing the loan and deposit accounts.
The increasing returns to scale in larger branches is due to ______
Commercial Bank was facing a financial crisis due to the crisis of non-performing assets. It went to the RBI for help. What role will RBI play in such a case?
Identify the correctly matched pair of the items in Column A to that of Column B
| Column A | Column B | ||
| 1 | Money | (a) | Supply of Money |
| 2 | Commercial Bank | (b) | Store of Value |
| 3 | Central Bank | (c) | Credit Control |
| 4 | M4 | (d) | Circulation of Money |
M3 = ______
The Narrow concept of money includes ______
It takes Rohan 30 minutes to do an economics assignment and one hour to do a finance assignment. What is the opportunity cost of you doing two economics assignments?
_________ is an institution that accept deposits for lending purposes.
Ms. lqra Ansari, a teacher, was explaining in her class about various types of deposits with the commercial banks. She quoted that - "These deposits form a part of M1 measure of money supply and are payable on demand by the commercial banks."
Identify the type of deposits she was explaining about and choose the correct alternative:
- Demand Deposits
- Time Deposits
- Post Office Deposits
